Last Wednesday was the Network Roundtable conference at Babson College in Boston, continuing the great work since the consortium was established almost two years ago. A little while ago I wrote that organizational network analysis is going mainstream, and the conference indeed showed the maturity of this management discipline. The presentations will be available soon at the Network Roundtable website.

One of the key themes of the event was knowledge worker productivity. Both Tom Davenport of Babson College and Marshall van Alstyne of MIT discussed recent compelling research which shows unequivocally that a person’s social networks is the single most important determinant of both personal career success, and productivity inside the organization. Organizations such as Raytheon, Hill & Knowlton, and Accenture shared some of their recent advances in the field. I spoke about applying networks to sales and relationships, looking from both supplier and client perspectives, tag-teaming with Ted Smith, Senior Vice President at CNET, who went into more depth on the study which I recently completed for them on technology purchase influence networks, and how this has uncovered a whole range of new, actionable insights not possible through more traditional research processes. I also discussed some of the other studies I’m doing on client-supplier connectivity, including current work on a very large technology outsourcing relationship, which shows in detail how a large financial services organization and its primary technology services firm are connected. The day rounded out with some fun and valuable views on networks from Tiziana Casciaro on the work featured in her recent Harvard Business Review article, showing the organizational implications of the people we can recognize so readily, such as the “competent jerk”, and “lovable fool”. It’s great to see the power of the network view of organizations beginning to reach its potential.

There can be few more important IT issues—for both large corporations and the vendors that service them—than making major technology purchasing decisions successfully. While technology is a massive expense for organizations, this money is often not well spent. To address this critical issue, CNET asked me to do a research study on this topic, which I did with Rob Cross of the Network Roundtable at the University of Virginia, Andrew Parker of Stanford University, and key CNET executives. Here is the link to the full CNET report on technology purchase influence networks.

Organizational network analysis is an immensely powerful tool, which we wished to apply to understand better how large technology purchasing decisions get made. These kinds of decisions are not made by individuals, they are made by a range of people within the technology and business sides of organization, using both formal and informal decision-making processes. As such, it makes eminent sense to use a network approach to understand how these roles are combined, what inputs they receive in the decision-making process, and what the roles are in this process of vendors and other external parties. We also wanted to uncover the vital differences between successful and unsuccessful technology purchasing decisions, and what organizations can do to more consistently make successful purchasing decisions. We surveyed 289 organizations, and for each one uncovered the influence networks that supported a major technology purchasing decision made over the previous 12 months. The technology purchases covered spanned enterprise software, servers, storage, and voice over IP.

The figure below shows one of the diagrams from the report, giving the combined network across all successful decisions.

Summary findings from the research include:

* The archetype for a successful purchasing decision is based on a strong IT Director/ IT Manager nexus that is well aligned with business executive roles.

* Input from selected external parties support successful decisions.

* Involvement from other external parties, especially vendors, yields mixed results.

* Unbalanced involvement of IT Technical Support is strongly correlated to unsuccessful decisions.

* Getting financial and business input from the CFO strongly supports decision success.

Go to the report for far more detail on all of these findings, and on the key differences between successful and unsuccessful decisions. I will be presenting with Ted Smith of CNET on the study, and more generally applying network approaches to generating revenue, enhancing relationships, and improving decision-making, at the Network Roundtable conference in Boston next week.

I am very interested in taking the findings from this research into new areas. Immediate possibilities include working with organizations to uncover their internal influence networks and enhance the success of their major purchasing decisions, working with vendors to identify ways of adding value to the decision-making of specific clients or client segments, and applying and adapting the influence network methodologies we have developed to other areas of purchasing and decision-making, potentially for consumer as well as organizational decisions. Definitely get in touch if you want to bounce around ideas on any of this. I’ll post here on new applications we find.

This week’s issue of BusinessWeek features a great article on organizational network analyis (ONA) called The Office Chart That Really Counts, showing that the discipline is really beginning to hit the mainstream (following BusinessWeek’s piece last October on related work). The article focuses on the work being done by organizations such as IBM, Accenture, Merck, Lehman Brothers, Capital One, Procter & Gamble, and others such as Goldman Sachs, McKinsey & Co., and Microsoft of the 53 companies that are members of the Network Roundtable. Rob Cross of the McIntire School of Commerce at the University of Virginia set up the Network Roundtable 18 months ago so that leading organizations could share what they are learning in applying network analysis to enhance performance, and thus accelerate the development of this immensely valuable discipline. Some of the key areas being addressed by roundtable members include developing talent and leadership, enhancing innovation, facilitating mergers and major reorganizations, and building superior client, supplier and partner relationships. I am the research leader for this last category of external connectivity work at the Network Roundtable, though I apply ONA across a broader range of areas with my clients.

Social network analysis is not new – it has been done since the 1930s to understand communication and relationship patterns in society. Organizational network analysis has developed over the last ten years to apply these early ideas to enhancing organizational performance. Many managers have been intrigued by the ideas, however found it difficult to get buy-in in their organizations to pursue what is perceived to be highly conceptual, to get to the highly pragmatic results. Cross has been instrumental in taking the discipline through this challenging stage, to where the tangible and immensely powerful outcomes of well-executed ONA are evident. The discipline is just starting to go beyond the pioneers into the mainstream. From here, expect to see the hype pick up, the vendors to jump on board, for possibly much ONA work to be done poorly which will impact on the discipline’s reputation, and so on in the usual management trend cycle. However that is only because this is indeed one of the most powerful – and relevant in the current economy – management interventions available today, and it is very much in a state of emergence.

I am currently working through the analysis of a network study I’m doing of the communication among the top 100 executives of a $3 billion diversified professional firm. The insights from the study into the company’s drivers of success are extraordinary, and when we workshop this with the top executive team, there is no question that it will significantly influence what action the company takes to move to the next level of success. The same issue of BusinessWeek also features an interview with Kate Ehrlich of IBM, who has been at the center of IBM’s work in applying ONA across the organization, including in innovation and sales effectiveness. Ehrlich, Cross, and I are currently working on a journal article that brings together some of our work and perspectives. More on this and other very tangible outcomes from the ONA work being done globally coming soon on this blog. This is an enormouly exciting space to be involved in.

BusinessWeek continues its attention to the unfolding online world with a cover story titled The MySpace Generation. MySpace is the most successful social networking site, boasting 40 million members, and serving an extraordinary 10% of all online ads viewed in October, according to BusinessWeek. People who have grown up in an online world want to socialise in an online world, tapping the immense power of mutual visibility, sharing, and multi-channel communication (of course without supplanting “meat” world interactions!).

Rupert Murdoch demonstrated he was finally a convert to the online world when he paid $580 million for MySpace’s owner Intermix Media in July. Under 25s have little interest in traditional media. Circulation figures for teen publications are plummeting. The only way to capture their attention is to get into the interstices of their immensely rich social interactions. Statistically and anecdotally, far more teens and young adults use MySpace or other social networks than have blogs. The reality is that the individual spaces on MySpace are much like blogs, yet within a bounded domain, and with specific tools to share music and other entertainment, the glue that binds together youth culture. I don’t believe that social networks such as MySpace are overhyped. We are just now getting to a stage where the technology allows easy, media-rich online interaction that supports offline socialising. As social network technologies shrink and enrich our personal degrees of separation, the next generation’s natural habitat is being born.

Some of the more discreet applications of social network analysis that have greatly intensified over the last years are in government intelligence, law enforcement, and homeland security. On one-level “network-centric warfare” (see for example the US Department Defence report to Congress on this) has grown to prominence – or even predominance – in military strategic thinking over the last four years. Leading network analyst Valdis Krebs published an interesting analysis of the terrorist networks involved in the tragedy of September 11, 2001. However social network analysis has been applied by intelligence agencies and law enforcement for decades. If you can uncover and analyze the relationships between people, places, organisations, transactions, and more, rather than just data on each of them individually, anomalies and intriguing connections rapidly come to the surface.

Interestingly, two Australian software companies are world leaders in applying social network analysis in these domains. Netmap Analytics emerged from work done in the 1980s by Dr John Galloway, who received his PhD in 1974 from Michigan State University for some of the early ground-breaking work on social networks, cybernetics, and systems theory. Netmap is used extensively by intelligence and law enforcement agencies around the world, in applications such as tracking money laundering and insider trading, as well as more covert applications. The software excels at processing extremely large data sets of relationships, and picking out the anomalous or interesting relationships. Insurance and retail fraud are other important applications. The Distillery has provided software primarily to the intelligence, defence, and law enforcement communities for around seven years, and now has around 70 employees. Its new Interquest Analytics front-end can be used by intelligence analysts to extract “entities” and “relationships” from the vast array of public (so-called “open source intelligence”) and non-public information, providing a deep and rich pool for analysis. The Interquest platform itself helps integrate disparate data sources to enable effective network analysis. Lockheed Martin has an extremely sophisticated tool for extracting relationships from text, called Aerotext. Netmap has the Australian and Asian distribution rights for this product, as it provides fantastic input for its high-powered network analytics engines. As companies with highly complementary offerings, Netmap Analytics and The Distillery often collaborate in showcasing and implementing their products.

In a world increasingly based on networks, social, technological, and otherwise, intelligence – government or commercial – must be based on understanding the relationships and connections in the world around us. This is a field set for massive growth.